Market Insights

State of the Seacoast--August 2007

SEACOAST BOARD OF REALTORS CONDUCTS SECOND STATE OF THE SEACOAST NEW CONFERENCE

PEASE INTERNATIONAL TRADEPORT--On Wednesday, August 22nd the media and REALTOR community gathered at the Seacoast Board of REALTOR's office to hear the Board's assessment of the current state of the Seacoast Real Estate market at the SBR's second semi-annual State of the Seacoast News Conference. The inaugural news conference was held in February.

The panel included John Rice, Seacoast Board president, Bonnie Guevin, New Hampshire Association of REALTORS president, both of whom spoke at February's meeting. New to the panel were Economist Dennis Delay, Deputy Director of the New Hampshire Center for Public Studies, noted local appraiser Peter Stanhope, President of the Stanhope Group in Portsmouth and Jerry Little, President of the New Hampshire Banker's Association.

Overall, the mood of the conference was surprisingly upbeat. Although we are certainly feeling the affects of a changing market, the experts conceded, New Hampshire is holding its own better than most parts of the country. For example, in an overall study of the foreclosure rates by state, New Hampshire placed a relatively conservative 34th. Based on a private study that the NH Banking Association had done, Mr. Little felt strongly that the state's foreclosures and delinquencies would continue to increase through the 1st quarter of 2008 then level off.

"Although typically we see the foreclosure rates increase during a recession," Little said, "this time we feel it is a direct reflection of the subprime market." In fact, again, all of the panelists echoed those sentiments.

Dennis Delay compared our current real estate conditions with that of the late 80's and early 90's. He concluded there really is no comparison. For example, back in the early 90's there were many contributing factors to the housing slump among them a recession marked by deep unemployment. None of these factors apply today. And, back then, there were sharply increased housing starts.

"Housing starts in New Hampshire were up to 18,000 at its peak back then," Delay said. "This was similar to the state of Connecticut which has triple our population. This time, although steadily increasing, we peaked at 8000."

Delay feels strongly that what is happening in the subprime market today is only a symptom of the real problem: housing prices rose too quickly. But, he adds, we are starting to right the ship. Currently, New Hampshire is very similar to the national average as far as the median housing price relative to income. In the late 80's and early 90's that was not the case.

"New Hampshire is actually in good shape," Delay continued. "Our economy is strong, jobs are increasing and they are high paying jobs. This is not a repeat of what we saw before."

Peter Stanhope shared New Hampshire property value statistics.

"Real Estate is a supply/demand relationship", he said. "As soon as we stop bringing on new product we will start to see the market level."

And not all property has seen depreciation, Stanhope adds.

"Well built, well maintained and well located properties has done fairly well through this market," Stanhope said. He added that Rockingham and Strafford counties have seen only a 7% depreciation on average in property values since August 2005. This is far below what the national media reports for the country.

Both Bonnie Guevin and John Rice shed some light on the New Hampshire market with some local statistics.

"I certainly wouldn't say this is a good market," said Guevin, "but locally we have not seen the big declines that you see read about in other areas."

In fact, Guevin gave statistics showing an average sales price decline of only 1.2% in the last 12 months.

"What has increased is the number of days on the market," she said. " That number has actually gone up by 16%."

Guevin attributed that fact to over abundant inventory. Currently, there is at least an 11-month supply of homes on the market. A more typical stable market might have about a six-month supply.

Specific to the Seacoast, John Rice was able to shed some light on what is happening locally. Sales in the first 2 quarters of 2007 were up over 2006. Using Portsmouth as an example he said of the 111 single-family homes sold since the first of the year, 27 closed within $6,000 of asking price, seven closed for more than asking price and eight closed at asking price.

"In real estate perceived value is the most critical element in the buying decision," Rice said. "Clearly, buyers see the Seacoast as having value. We need to share some of the good stories out there. It is not all doom and gloom."

Both Guevin and Rice agreed, "The good news is that buyers now have choices. The news isn't great, but it isn't all that bad either."

The Seacoast Board will hold its next State of the Seacoast press conference in January 2008.